MIDDLETOWN – The township’s sewerage authority will be using a $1.08 million state grant for work that will lead to reducing its electric bills.

The Township of Middle­town Sewerage Authority (TOMSA) recently received the grant from the New Jersey Clean Energy Pro­gram, which the authority plans to use toward the construction of a co-generation facility at its wastewater treatment plant. That facility, according to a township representative, will capture methane gas created as a byproduct of the wastewater treatment, and convert it to useable electricity. The methane would otherwise be released into the atmosphere.

The electricity generated by the facility would cover as much as 60 percent of the sewerage authority’s needs, amounting to a $230,000 annual saving, according to Patrick Parkinson, TOMSA executive director.

The co-generation facility is expected to ultimately cost $3.1 million, with TOMSA, a self-sustaining authority, responsible for the remaining $2.02 million cost. There are no plans for the authority to borrow to pay for the project that is expected to pay for itself over a nine-year period, Parkinson said. Service will then be supplied to customers for $70 per quarter.

The co-generation facility is expected to be completed by mid-2013.

“It’s great news that the sewerage authority has found a new way to keep their costs low and fees stable,” Mayor Anthony P. Fiore said in a township press release. “The new co-gen facility echoes our mandate of finding innovative ways to generate taxpayer savings while also providing a great benefit to our environment.”

Jeff Tittel, director of the New Jersey Chapter of the Sierra Club, said that, while he is never one who usually trusts the actions of sewerage authorities, “this is something that is actually a positive.”

Methane pollution from sewer plants is a significant contributor to greenhouse gases and all that means for the environment. By using the gas and converting it to electricity, it saves money and helps the overall environment. “It’s a win-win, or as we say lemons to lemonade,” Tittel said.

The technology is becoming more prevalent around the country, including some large urban centers, like Boston. In Los Angeles, where Tittel said he worked for Mayor Tom Bradley, the city established a 640-megawatt power plant that runs off of methane.

The New Jersey Clean Energy Program is administered through the state’s Board of Public Utility Office of Clean Energy. The office was established in 2003 to promote increased energy efficiency and the use of renewable energy sources.